Energy Emergencies vs. Manufactured Crises: The Limits of Federal Authority to Disrupt Power Markets

SHARON JACOBS ARI PESKOE Associate Professor, Director, Electricity Law Initiative, University of Colorado School of Law Harvard Law School Environmental and Energy Law Program Board Member, Getches-Wilkinson Center for Natural Resources, Energy, and the Environment

| June 3, 2019 | Table of Contents

Keeping the Lights On: Resource Adequacy and Operational Standards______4

Reliability Before Regulation______4

Modern Reliability Regulation______6

Reliability Performance______7

Delivery Disruptions ______7

Generation Resource Mix ______9 Energy Emergency Authorities______10

The Federal Power Act______11

The Fixing America’s Surface Transportation Act______12

The National Energy Act of 1978______13

The Defense Production Act______14

Title I______15

Title III______15 Manufacturing a Crisis to Bail Out “Fuel-Secure” Generators ______16

Perry’s Memo and DOE’s Study______17

DOE’s Bailout Proposal ______19

Industry and DOE Reinforce Bailout Push ______21

FirstEnergy Cries Emergency______22

DOE Pivots to National Security ______23

Bailout Efforts Fizzle______24 The Misuse and Abuse of Energy Emergency Authority______25

Triggering Events______26

Authorized Actions ______28

Duration of Remedies______31 Conclusion ______31

Appendix: DOE Invocations of Federal Power Act Section 202(c)______32

Endnotes ______33

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 2 Reliable electric service is built upon long-term Since early 2017, the current Administration has planning and requires constant coordination among flirted with invoking these powers to bail out coal- myriad actors. Industry protocols and market rules fired power plants. This paper examines statutes keep the system in balance by aligning operations that provide federal agencies or the President with with the laws of physics that govern the movement emergency powers over energy assets, including of electric energy. Economic incentives enshrined in a law related to “defense critical materials” that law, market prices, and operational standards inform is discussed in a leaked Administration document long-term investment decisions. Collectively, these that purports to justify a bailout. We answer three protocols, rules, and incentives assist generators, key questions about these federal laws: 1) What utilities, and regional grid operators in meeting conditions allow DOE to declare an “emergency” or consumer demand at every instant. to otherwise invoke these statutes? 2) What powers does DOE have under these statutes to alleviate Energy emergencies interrupt these complex emergency conditions or to respond to national but orderly operations. Such emergencies are security threats? And, 3) When do these statutory usually characterized by supply shocks caused by authorities expire once invoked? infrastructure failure. Severe weather is the leading cause of such failures, and federal policymakers We conclude that these statutes do not provide are increasingly turning their attention to cyber and the authority this Administration seeks to prop up physical sabotage. economically failing coal plants. We first outline the extensive frameworks in place to ensure the Because genuine emergencies demand a swift and reliability of the electric grid. Then we survey decisive response, several federal laws consolidate the statutory authorities available to respond to limited emergency control over the industry in grid emergencies. Finally, we detail the Trump the Department of Energy (DOE) or the President, Administration’s proposals to support coal-fired temporarily empowering them to override existing law generation and explain why the emergency statutes and order actions inconsistent with the contracts, are a poor fit for these efforts. prices, or protocols that govern the industry’s day- to-day operations. These authorities, however, are narrow, as befits the nature of emergency response. Congress had specific types of threats in mind and limited the authorities granted to those needed to respond to a crisis. The statutes outline the conditions under which federal actors may assert emergency powers and enumerate those powers with specificity.

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 3 By the 1920s, utilities routinely connected to each Keeping the Lights On: other to facilitate energy transfers during outages or Resource Adequacy and to share generation resources to meet each utility’s resource adequacy needs.3 While sharing electric Operational Standards power is now a routine technical task, connecting neighboring utility systems involves much more than Reliable electric service requires that generation and simply plugging in. Supply and demand must be delivery resources sufficient to meet demand operate in balance, and the voltage, frequency, and other in compliance with industry protocols and market operating parameters of the shared system must rules. While these two components of reliability remain within safe limits.4 To maintain the stability – resource adequacy and operational standards – of their shared system, interconnecting utilities must were historically maintained with limited government coordinate their operations. oversight, today, the Federal Energy Regulatory Commission (FERC) is deeply involved. FERC Increasing interconnectedness led to new regulates interstate power markets that incentivize arrangements. Regional “power pools” facilitated steady power flows, approves and enforces reliability varying levels of cooperation and coordination standards, and has indirect authority over resource among utilities. Some power pool agreements adequacy in some regional markets.1 No other codified reliability standards among participants. federal government entity has authority relevant Such standards might have, for example, prescribed to the day-to-day provision of reliable electric for each utility the amount of generation capacity service. This section offers an overview of reliability that could be brought online instantaneously to regulation in order to contrast it with the emergency meet unplanned generator outages or demand authorities discussed in the next section. spikes.5 These private agreements were essential components of maintaining reliable electric service. Reliability Before Regulation In 1935, the federal government entered the field of utility regulation. Congress passed the Federal Historically, the federal government had no oversight Power Act (FPA), providing FERC with jurisdiction over over the nation’s interconnected electric networks. rates, terms, and conditions for electric transmission Electric utilities have a duty to deliver adequate and wholesale power sales in interstate commerce.6 service that is rooted in state or local laws.2 These The FPA explicitly denied federal regulators any laws sanctioned monopoly service territories for authority over “generation facilities” and specifically utilities on the condition that utilities deliver reliable prohibited FERC from “compel[ling] the enlargement service. In the industry’s earliest days, each utility of generation facilities” to facilitate energy transfers owned all of the infrastructure that generated and to another utility.7 Federal regulation of interstate delivered power to its ratepayers. Reliable service power lines focused on the rates utilities charged for was premised on each utility building and effectively service and did not generally intrude on operations. operating sufficient infrastructure.

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 4 As the scale of interconnected systems grew, the From 1995 to 2005, utility ownership of generation industry coalesced around technical standards declined from nearly 90 percent of total capacity and began to formalize their implementation.8 down to 63 percent as non-utility power producers In the 1960s, utilities created two organizations purchased utility assets and constructed generators for exchanging information about reliability, that competed in newly created wholesale power coordinating regional planning, and setting markets.11 Meanwhile, in several parts of the operational standards.9 These organizations, country, utilities ceded operational control of which later consolidated into the North American the interstate transmission network to non-profit Electric Reliability Council (NERC), operated without regional transmission organizations (RTO) charged enforcement authority or direct government with providing all generators and utilities non- oversight. Reliability depended on industry’s discriminatory service. These dramatic changes in voluntary coordination rather than legal compliance. ownership and management led FERC to caution Nonetheless, utilities “universally” adopted NERC’s in 1998 that “issues concerning scheduling, operating and planning policies, standards, and curtailment, and reliability are becoming more procedures that covered emergency operations, complex.”12 Two years later, DOE similarly warned facility connection requirements, system modelling, that, given this increasing complexity, “voluntary personnel training, system protection, control and self-regulation of reliability issues may not be restoration, and other areas.10 sufficient.”13

In the 1990s, industry restructuring facilitated by FERC reforms resulted in more diverse ownership of power plants and new operational practices.

FERC-Regulated Regional Transmission Organizations, courtesy of sustainableFERC.org

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 5 Modern Reliability Regulation over transmission tariffs to impose technical requirements that aim to bolster reliability. Responding to these warnings and in reaction to a FERC also regulates resource adequacy regimes 2003 blackout in the northeast, in 2005 Congress that are codified in contracts for wholesale power or amended the FPA to provide FERC with authority transmission service or RTO rules. FERC approves over reliability standards.14 The law requires FERC the rules for capacity auctions run by PJM, ISO-NE, to certify an organization to develop reliability and NYISO that ensure each region has sufficient standards, review and approve the organization’s resources to meet peak demand. The other FERC- proposed reliability standards, and impose penalties regulated RTOs have rules that ensure each member on entities that violate those standards. By 2007, utility owns or has contracted with sufficient capacity FERC had designated NERC as the nation’s reliability or that allow the RTO to contract with resources organization and approved 83 proposed reliability needed to meet any shortfall. standards that “collectively define overall acceptable performance with regard to operation, planning and FERC-regulated RTOs also ensure that power plant design” of the interstate bulk-power system.15 Today, retirements do not put reliability at risk. Several NERC reliability standards cover a vast array of months prior to a planned retirement, a generator industry operations, from transmission scheduling to participating in an RTO market must notify the RTO managing vegetation near high-voltage power lines to of its to intent to shut down. If the RTO concludes physical and cyber security of critical infrastructure. that the proposed retirement will impair its ability to operate the transmission network reliably, the FERC’s oversight over RTO power markets aims to RTO may provide the generator a contract for its align industry incentives with reliable operations. continued operation. The agreement carves the Pursuant to FERC-approved rules, RTOs dispatch generator out of the market and pays it a rate that generators based on their offers to supply power. ensures it will recover its costs rather than the Prices reflect the cost of balancing supply and market rate. Once new resources come online, the demand and vary by location to reflect the physical RTO will not renew the contract. transmission system and actual power flows on the grid. For example, high prices in one location States also play important roles in maintaining reflect a transmission constraint that prevents the reliable electric service. In general, state utility movement of low-cost power into the area, requiring regulators have exclusive authority over the the RTO to dispatch higher-cost generators to distribution facilities that connect to homes and meet local demand. RTOs also operate markets for businesses16 and may regulate utility operations and grid reliability services needed to maintain steady performance. States also have exclusive authority power flows. In non-RTO regions, traditional power over siting new infrastructure, including facilities that pool agreements and contracts among utilities are essential for reliability. and independent power producers achieve the same reliability goals. FERC also uses its authority

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 6 This system appears to be effective, at least a handful of contiguous households or businesses. at the federal level. NERC’s annual “State of Although the industry does not standardize reporting Reliability” reports, which summarize the day-to-day of these small-scale events, evidence suggests that performance of myriad industry actors in maintaining frequency and duration of these events varies and reliable electric service, consistently find that the fluctuates across the country.22 There are numerous North American high-voltage system operates at potential explanations for the uneven performance, a high level.17 In addition, as discussed in more including weather, system topology (urban vs. rural), detail in the next section, energy emergencies are age of utility infrastructure, and utility spending on exceedingly rare. Market rules and operational preventative maintenance.23 protocols predictably and dependably maintain steady power flows. “Approximately 90% of all Reliability Performance blackouts, as measured by minutes that a consumer is DELIVERY DISRUPTIONS without power, are due to With more than half a million miles of high-voltage disturbances on utility-owned power lines connecting seven thousand generators distribution system.” to six million miles of distribution lines, the nation’s power infrastructure is ubiquitous.18 The vast scale of the electric generation and delivery systems The remaining 10% of blackouts are due to incidents portends the inevitability of blackouts. On utility- on the interstate transmission system. Weather owned distribution systems, failure of a single wire is the most prevalent cause of these large-scale can cause nearby consumers to lose power. High- outages.24 In 2015, for example, weather caused voltage networks, by contrast, are designed and all twelve outages that affected at least 250,000 operated according to NERC standards and must be consumers and 83% of the 35 outages that affected capable of withstanding scheduled and “reasonably 50,000 to 250,000 consumers. Equipment failure expected” unscheduled outages of system was the next most frequent cause, responsible for components.19 Nonetheless, multiple disturbances the remaining 17 percent of these outages.25 due to weather, fire, equipment failure, human error, The Northeast Blackout of 2003, which left 50 sabotage, or other causes can result in widespread million people in the dark, illustrates how multiple service interruption.20 disturbances can have cascading effects. Due to Approximately 90% of all blackouts, as measured equipment failures and lack of preparation, utility by minutes that a consumer is without power, are engineers were unaware of the severe consequences due to disturbances on utility-owned distribution of high-voltage power line outages caused by systems.21 These localized outages typically affect contact with overgrown vegetation. According

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 7 to a DOE-led task force report on the blackout, in utility and grid operator control rooms, provide these simultaneous faults “triggered a cascade of operators with information to support split-second interruptions on the high voltage system . . . such decisions that may avert a cascading failure. But this that within seven minutes the blackout rippled connectivity and embedded intelligence exposes a from the Cleveland-Akron area across much of the new vulnerability to cyber threats.30 northeast United States and Canada. . . . more than Cyberattacks by foreign adversaries or domestic 508 generating units at 265 power plants had been terrorists have the potential for devastating lost, and tens of millions of people in the United consequences. Although cyberattacks on U.S. States and Canada were without electric power.”26 energy infrastructure to date have produced minimal Two years later, Congress specified that FERC- consequences, a DOE report warns that more approved reliability standards must be designed to significant “attacks across the globe on energy prevent such cascading failures.27 Although reliability systems should be viewed as indicators of what standards are now enforceable under federal law, is possible.”31 The first confirmed hack to affect a implementation is imperfect. For example, in 2011 power system left nearly a quarter million people nearly three million customers in the southwest lost in Ukraine without power for three to six hours in power when a single transmission line outage led to December 2015.32 As with the major U.S. blackouts cascading failures across the high-voltage network. in 2003 and 2011, human error was a precipitating An initial post-incident report blamed operators’ cause. Hackers gained access to distribution “inadequate situational awareness and planning” for infrastructure by targeting utility IT personnel with an allowing it to unfold across the region.28 Subsequent email phishing campaign.33 investigations by FERC and NERC led to settlement Physical sabotage could also cause widespread agreements with four utilities, an RTO, and the outages, although there have not been any major regional entity delegated by NERC to monitor and incidents in the U.S. A 2013 sniper attack in enforce compliance. The settling parties agreed to California that disabled seventeen high-voltage pay a total of $37.9 million in fines and admitted to transformers failed to knock out power, but it 21 reliability standards violations.29 highlighted the vulnerability of utility infrastructure.34 Such investigations and fines can generate useful A year later, FERC approved a reliability standard information and signal to industry the importance of that requires robust security measures at critical complying with reliability standards. Of course, it is transmission stations and substations that connect not possible to eliminate the risk of future incidents the interstate transmission network to utility entirely. The flow of electric energy is dynamic, distribution grids.35 However, the requirement affects and disturbances manifest differently across the only a small percentage of the nation’s substations.36 power network depending on the instantaneous Speaking at a FERC hearing in 2016, NERC’s CEO conditions. Modern computing and communications speculated that it could take weeks or even months technologies, spread across the grid and clustered to restore service following coordinated attacks on

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 8 multiple sites.37 overseen by FERC and NERC are ostensibly resource-neutral. Yet, regulators long assumed A cyber or physical attack on natural gas pipelines that conventional plants – powered by fossil fuels, could also cause electricity outages. Nationwide, hydro, or nuclear – would dominate the system. natural gas powered nearly one-third of all electricity Such plants are characterized by massive rotating generated in the United States in 2017, ending coal’s generators that supply a steady and predictable century-long run as the industry’s top fuel.38 Although amount of electricity. Traditionally, grid operators the U.S. has plentiful supplies of natural gas, an relied on these plants producing at or near capacity interruption in delivery due to a pipeline attack would to meet the base level of consumer demand. These cause most natural gas-fired power plants receiving so-called baseload units tended to be high capacity, fuel from that pipeline to shut down. Natural gas most economical to run at capacity, and incapable is delivered to power plants as it is consumed, of adjusting their output on a short-term basis. As and only some plants that primarily run on gas demand changed throughout a given day, system are capable of burning other fuels.39 A 2016 NERC operators brought more flexible plants online and report unsurprisingly concluded that “areas with scheduled them to vary their output in concert with a growing reliance on natural gas-fired generation forecasted demand.45 are increasingly vulnerable to issues related to gas supply unavailability.”40 “Fuel availability is not causing GENERATION RESOURCE MIX blackouts. Today, the U.S. has 41 Fuel availability is not causing blackouts. Today, the far more generation capacity U.S. has far more generation capacity than needed to maintain reliable service42 and abundant supplies than needed to maintain of the fuels that power the grid. reliable service and abundant Nonetheless, NERC has recently called attention supplies of the fuels that power to the growth of intermittent resources and the the grid.” downturn in baseload generation. When combined with recent retirements of coal and nuclear plants, “the rapid addition of variable resources [is] altering The growth of intermittent renewables, combined the operating characteristics of the grid.”43 While with the dramatic decline in the cost of natural gas, NERC observes that these changes in the generation have disrupted this entrenched operational model. mix are “significant and rapid,” it emphasizes that Modern natural gas-fired plants generate cheaper the industry is capable of managing associated energy than traditional baseload plants in many challenges with careful planning and management.44 regions of the country. Meanwhile, flexible resources are needed to smooth the variable output of wind The reliability and resource adequacy regimes and solar plants. Traditional baseload generators are

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 9 inflexible and therefore incapable of complementing they authorize only a limited set of actions in intermittent generators.46 These dynamics, as well response to those emergency conditions. Finally, as other factors, have disadvantaged traditional those actions must cease when the emergency baseload plants economically, leading many of them comes to an end. to go offline.47 This section examines these limits in the context NERC has recognized that system operators and of emergency provisions from four federal laws: planners need to “adapt.”48 With many traditional the Federal Power Act (FPA),51 the Fixing America’s baseload generators retiring or operating less Surface Transportation (FAST) Act,52 the Natural frequently, other resources must provide so- Gas Policy Act of 1978 (NGPA),53 and the Public called Essential Reliability Services (ERS). NERC Utility Regulatory Policies Act (PURPA).54 It also recommends that FERC “support new [RTO] market discusses the Defense Production Act (DPA),55 a products and/or changes to market rules that statute that authorizes market interventions by the support the provision of” these services and ensure federal government for national defense purposes. that all resources technically capable of providing While its structure is different from that of the first those services are allowed to do so.49 More broadly, four statutes, the DPA’s purpose is similar in that NERC expects that solutions will include “some mix it authorizes the federal government to exercise of market approaches, technology enhancements, extraordinary powers of limited duration in order to and reliability rules or other regulatory rule address exigent circumstances. changes.”50 Another statute, the National Emergencies Act, enables the President to unlock approximately 120 emergency authorities embedded in other statutes. However, apart from provisions related to the DPA (discussed below), it is not apparent how any of these authorities could be used to mandate actions Energy Emergency by the power sector and thus this paper does not 56 Authorities discuss the Act further. Crucially, none of these emergency authorities was As the previous section cautioned, no amount of intended to substitute for the comprehensive system planning can prevent all grid emergencies. Congress of electricity market regulation, reliability oversight, has therefore enacted laws that empower executive and long-term planning detailed in Part I. Instead, actors to respond to emergencies that threaten these laws are scalpels, designed to address energy supply. Each of these statutes contains particular exigencies of limited duration. important limitations, however. First, they are only triggered when the President or the DOE declares that specified emergency conditions exist. Second,

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 10 The Federal Power Act justifications for intervention.64 As detailed in the Appendix, DOE has invoked Section 202(c) eight Section 202(c) of the Federal Power Act authorizes times since 2000. Two invocations came in response 65 the Secretary of Energy to take action to ensure to hurricane damage. One came in the wake of the 66 continued operation of the electric grid during California Energy Crisis. Two required operation of periods of emergency. This section has been invoked a controversial underwater cable under Long Island 67 a handful of times in response to natural disasters Sound. And three invocations overrode market- 68 as well as other supply events.57 The Secretary of based retirement decisions by power plant owners. Energy may exercise Section 202(c) authorities either during a war in which the United States is engaged or by determining that an emergency exists.58 “While the statute grants the Secretary discretion to Section 202(c) identifies four specific circumstances that may support an emergency finding. The craft a remedy, it does not Secretary may make such a finding based on 1) a write a blank check. Section “sudden increase in the demand for electric energy,” 202(c) orders must be limited 2) a “shortage of electric energy,” 3) a shortage “of facilities for the generation or transmission of to actions the Secretary electric energy,” 4) or a shortage of “fuel or water determines will ‘best meet for generating facilities.”59 In addition, a catch-all provision allows the Secretary to conclude that an the emergency’ and ‘serve the emergency exists because of “other causes.”60 public interest.’”

Congress added this section in response to concerns about power shortages during wartime as well as Once the Secretary finds that an emergency during “[d]rought and other natural emergencies,” exists, she may “require by order such temporary suggesting that Congress had in mind shortages connections of facilities and such generation, linked to emergency events rather than garden delivery, interchange, or transmission of electric variety resource adequacy concerns.61 Although the energy as in [her] judgment will best meet the statute does not connect emergencies to violations emergency and serve the public interest.”69 The of NERC’s reliability rules, in practice the most recent Secretary has invoked Section 202(c) authority in DOE orders aimed at ensuring compliance with NERC the past to require that power plants continue to standards.62 run, that energy or services be delivered to specific market actors, that transmission lines be operated, 63 No formal declaration of emergency is required. and that interconnections be made. In practice, the Department of Energy issues orders that explain the relevant emergency, thus providing While the statute grants the Secretary discretion a basis for judicial review of the Department’s to craft a remedy, it does not write a blank check.

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 11 Section 202(c) orders must be limited to actions the In the past, the Secretary has put in place 202(c) Secretary determines will “best meet the emergency” emergency orders that have lasted a single day and and “serve the public interest.” Indeed, the Senate others that been renewed for nearly two years.79 In Report on the Federal Power Act emphasizes the the latter case, DOE allowed a coal-fired power plant restricted nature of these powers, noting that the to continue periodic operations notwithstanding “emergency powers . . . which were indefinite in the its contribution to local exceedances of National original bill have been spelled out with particularity Ambient Air Quality Standards in violation of the in section 202(c) and appropriately limited to periods federal Clean Air Act.80 The nearly two-year duration of war or other emergency.”70 While actions taken provided a potential opportunity to test the limit under 202(c) are not constrained by reliability rules of the term “temporary,” but the order was not or market prices nor subject to environmental laws challenged in court. or regulations,71 some constraints do apply. For example, if the parties affected cannot agree on the The Fixing America’s Surface terms that would enable them to carry the order out, Transportation Act the Secretary may prescribe such terms, including compensation and reimbursement, by supplemental The FAST Act, whose emergency provisions have not 72 order. These terms must comport with the statutory yet been invoked, gives the Secretary of Energy broad “just and reasonable” standard, and are ultimately powers to respond to an attack on the electricity grid 73 determined by FERC. Additionally, actions taken or to a disruption caused by a geomagnetic storm. pursuant to a 202(c) order must minimize adverse While the Secretary has significant discretion to environmental impacts “to the maximum extent address such disruptions, these interventions are 74 practicable.” designed to be extremely brief in duration.

As noted above, Section 202(c) allows the Secretary Under the FAST Act, the President may declare of Energy to “require by order such temporary a “grid security emergency” when there is an connections of facilities and such generation, “occurrence or imminent danger” of either “a delivery, interchange, or transmission of electric malicious act using electronic communication or energy as in [his] judgment will best meet the an electromagnetic pulse, or a geomagnetic storm 75 emergency . . .” In terms of duration, the key event” that “disrupts” the operation of equipment 76 word here is “temporary.” Orders may not extend that is “essential to the reliability” of critical indefinitely. Those that conflict with environmental infrastructure,” or “a direct physical attack” on laws or regulations expire within 90 days of their critical infrastructure that affects its reliability.81 issuance and may be renewed only after consultation Importantly, only the effects of particular events on with the federal agency with primary expertise in specific infrastructure, and not the event themselves, 77 the relevant environmental interest. Orders should trigger the Act’s authorities. include conditions that the agency determines are necessary to minimize environmental impacts.78

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 12 The Act applies to disruption of two types of various state and non-state actors.88 infrastructure. “Critical electric infrastructure” is While FAST Act authorities are not narrowly defined, defined as “a system or asset of the bulk-power the duration of such actions is strictly limited to the system, whether physical or virtual, the incapacity or emergency period. Orders for emergency measures destruction of which would negatively affect national expire 15 days after their issuance.89 The Secretary security, economic security, public health or safety, or may reissue emergency orders for subsequent 15 any combination of such matters.”82 “Defense critical day periods, but only if the President has provided electric infrastructure,” meanwhile, means electric a written determination that the grid security infrastructure in the continental United States “that emergency “continues to exist or that the emergency serves a facility designated by the Secretary of measure continues to be required.”90 Energy as critical to the defense of the United States” and that is “vulnerable to a disruption of the supply of electric energy provided to such facility by an The National Energy Act of 1978 external provider.”83 While aimed at natural gas supply rather than In order to declare a grid security emergency, the directly at the electricity grid, the emergency President must provide the Secretary of Energy with authorities in the NGPA and PURPA give the federal a written directive or determination.84 The President government important powers to keep the lights must also “promptly notify congressional committees on in the case of natural gas supply disruptions. As of relevant jurisdiction” of the justification for this will be discussed in the next section, the current directive or declaration as well as its contents.85 Administration has argued that the potential for natural gas supply interruptions are a grave threat The FAST Act provides few details about the nature of to the electricity grid’s “resilience” and may justify an emergency response. It merely states that action to support generators fueled by coal and “[t]he Secretary may, with or without notice, uranium. Because provisions of the National Energy hearing, or report, issue such orders for emergency Act provide the President with authority to restore measures as are necessary in the judgment of gas service to the power sector in the event of an the Secretary to protect or restore the reliability emergency, however, they undermine claims that the of critical electric infrastructure or of defense critical federal government would be powerless to address a electric infrastructure during such emergency.”86 The natural gas supply emergency. Secretary’s actions are not constrained by FERC- regulated reliability rules or other market rules. Two laws allow the President to declare a natural gas supply emergency if he finds that (1) a “severe” However, the FAST Act authorities are not wholly natural gas shortage that endangers the supply of without limit. All actions must be tied to the high-priority users either exists or “is imminent” and protection of critical infrastructure. In addition, that (2) other alternatives have been exhausted and before taking action under the Section, the Secretary that using the authorities described in this section is must consult “to the extent practicable”87 with

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 13 therefore reasonably necessary.91 High-priority users products rather than gas. He may prohibit any include residential and low-capacity commercial electric power plant or major fuel-burning installation consumers, and any users “the curtailment of which from burning natural gas if he determines that the President determines would endanger life, (1) the plant or installation has the ability to burn health, or maintenance of physical property.”92 This petroleum products without damage and without final clause could include the power sector. interfering with operational requirements; (2) significant quantities of natural gas that would During a natural gas supply emergency, the have been burned by the plant or installation can President may authorize interstate pipelines and be made available during the emergency for a local distribution companies to contract for the high-priority use; and (3) that petroleum products purchase of emergency supplies of natural gas on for use by the plant or installation will be available terms and conditions that the President deems during the emergency period.101 When an order to “appropriate.”93 These emergency contracts may burn petroleum projects results in “imminent and not exceed four months in duration, except that they substantial endangerment” to health, the President may be renewed upon Presidential authorization.94 may exempt the plant or installation from the He may also order the construction and operation order.102 of natural gas pipelines if “necessary” to carry out a contract or order under the Act.95 Emergency declarations under the Act expire when the President finds that the shortage no longer If the President is notified by a state governor that exists or is no longer imminent, or 120 days after a shortage of natural gas in that state exists or is the declaration, whichever is earlier.103 However, the imminent and that state authority is inadequate President may extend the emergency declaration to protect high-priority users from a supply if he finds that the same criteria required for the interruption,96 he may allocate supplies of natural original declaration are met.104 Within 90 days of gas among interstate pipelines, local distribution the termination of a natural gas supply emergency, companies, and high-priority users.97 Before making the President must report to Congress on how he such allocations, the President must find that doing has exercised his authorities with respect to the so is reasonably necessary to assist in meeting allocation of natural gas supplies.105 the demands of high-priority users.98 He must also 99 consider the relative availability of alternative fuel. The Defense Production Act If there is disagreement about the compensation owed for natural gas or transportation under a Unlike the statutes discussed above, exercise of DPA Presidential order, the President must hold a hearing authority is not premised on the declaration of an and prescribe compensation according to statutory emergency per se. While no emergency declaration guidelines.100 is required to invoke the Act’s authorities, however, Finally, the President may require fuel-switching most actions must be justified by reference to 106 at power plants that are able to burn petroleum national defense. The DPA is also distinct from the

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 14 statutes discussed above in that it does not allow These authorities may not be used to require the federal government to override reliability rules private actors to buy things they do not want. Title or to subvert energy market prices. However, the I’s authorities were invoked during the California government may itself act as a market participant or Energy Crisis to require natural gas sellers to subsidize industry. prioritize and perform contracts with PG&E, which needed gas deliveries to meet consumer demand.113 TITLE I The government also invoked Title I during the construction of the Trans-Alaska Pipeline to help the Title I authorizes the President to require “the pipeline’s developer obtain materials on a priority allocation of, or the priority performance under basis.114 contracts or orders . . . relating to, materials, equipment, and services in order to maximize TITLE III domestic energy supplies.”107 This authority allows the President to require that suppliers prioritize the Title III authorizes the President to make loans government’s orders of goods and services over or loan guarantees to companies in various orders from other customers. The President may industries, but only if certain threshold criteria only do so if he makes a series of findings, including are met. In order to make a loan, the President that the subject materials, services, or facilities must 1) identify a shortfall in particular industrial are “scarce, critical and essential” to “maintain resources or materials essential for national or expand exploration, production, refining, [or] defense;115 and 2) find that financial assistance transportation,” to “conserve energy supplies, or is not otherwise available from private sources on “to construct and maintain energy facilities.”108 The reasonable terms.116 If the loan is made during a President must also find that these actions “cannot period of national emergency, it must be the most reasonably be accomplished without exercising” cost-effective, expedient, and practical method for the section’s authorities.109 The President has meeting the need and the Secretary of the Treasury delegated his authority to make these findings and must deem the interest rate reasonable.117 to take action under this section to the Secretary of Title III also authorizes the President to purchase Energy.110 industrial resources and to encourage “exploration, The President also has more general authority development, and mining of critical and strategic to prioritize performance of contracts that are materials, and other materials.”118 The phrase “necessary or appropriate to promote the national “industrial resources” includes “any raw materials” defense,” as long as the contracts concern “critical as well as “commodities.”119 This authority, too, and strategic materials.”111 The Act expressly hinges on a finding that the resource is “essential to designates energy a “strategic and critical the national defense.”120 material.”112 There are several important constraints on Crucially, Title I is directed at sellers, not buyers. the exercise of these authorities. Government

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 15 commitments may not exceed $50 million unless Each of the statutes discussed in this section specifically authorized by law.121 The President can provides the president with some authority disregard this cap by declaring an emergency under to intervene in electricity operations during the National Emergencies Act or by determining emergencies or to promote the national defense. “that a specific guarantee is necessary to avert an What they do not contemplate, however, is the industrial resource . . . shortfall that would severely fabrication of a crisis in order to provide the impair national defense capability.”122 In addition, president greater control over the grid and its loan guarantees must not be used primarily to resources. And yet, as the next section will argue, prevent financial insolvency or bankruptcy unless the that is precisely what the Administration has President details to Congress how the insolvency or proposed. bankruptcy “would have a direct and substantially adverse effect upon defense production.”123 Finally, for direct purchases, purchase price is limited by prevailing market prices unless a determination is made that supply “could not be effectively increased at lower prices or on terms more favorable to the Government” or that “such purchases are necessary Manufacturing a Crisis to assure the availability to the United States of to Bail Out “Fuel- overseas supplies.”124

Because the Defense Production Act requires no Secure” Generators declaration of emergency, its authorities do not have The Trump Administration’s efforts to bail out aging the same kind of time limitations as FPA 202(c) and uncompetitive baseload plants, particularly or the FAST Act. However, to the extent that the those powered by coal, began almost immediately. justification for invoking any of the DPA’s authorities Initially, DOE sought to rewrite RTO market rules is a national emergency declared by Congress or the to increase rates paid to baseload plants. When President, those invocations should expire upon the FERC rejected that plan in January 2018, the declared end of the emergency. Administration and its allies shifted tactics and considered invoking energy emergency authorities. The DPA also limits the duration of specific actions. In March, a nuclear and coal plant owner filed a FPA Agreements to purchase under Title III may not 202(c) request that sought a region-wide carve-out extend for more than ten years, for example.125 The from prevailing low wholesale prices for coal and most important temporal limitation on DPA authority, nuclear plants. While the Administration was taking however, is that the Act itself sunsets in 2025.126 comment on that filing, it was hatching its own Each version of the Act since its original passage has scheme to predicate a bailout on national defense. included a similar sunset provision.127

* * *

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 16 This section documents the Administration’s burdens placed by the previous Administration 18-month campaign to bail out unprofitable on baseload generators.”129 In prepared remarks, power plants. It demonstrates that while the Perry asserted that “no reasonable person can Administration’s goal has remained consistent, its deny that the thumb, and in some cases the whole narrative has shifted. DOE initially suggested that hand, has been put on the scale to favor certain “fuel-secure” resources are necessary for reliability, political outcomes” in energy markets, and called then pivoted to a nebulous concept dubbed out the previous Administration’s “hostility to coal.” “resilience,” and finally national security. Responding to a question about whether the federal government might preempt state renewable energy Secretary Perry Claims Baseload policies, Secretary Perry defended the proposition Generators Are Necessary; Staff by appealing to national security interests, singling Finds Otherwise out the nuclear industry as particularly relevant to national defense. The salient link, according to Perry, was the industry’s workforce, not the “baseload” Energy Secretary Rick Perry kicked off his campaign characteristics of its power plants.130 to bail out baseload coal and nuclear plants in April 2017, ordering DOE staff to study whether The next week, EPA Administrator Scott Pruitt joined “regulatory burdens . . . are responsible for forcing the campaign to support baseload plants, and in the premature retirement of baseload power plants” particular coal. In several media interviews, he and whether markets “are adequately compensating claimed that the grid “need[s] solid hydrocarbons [for] attributes such as on-site fuel supply and on-site that you can store, so when peak demand other factors that strengthen grid resilience.”128 rises, you’ve got solid hydrocarbons to draw on.”131 The letter telegraphed Secretary Perry’s desired He called coal a “safeguard to preserve the grid” in result, declaring that “baseload power is necessary the event of an attack on U.S. infrastructure.132 Pruitt to a well-functioning grid,” and vaguely asserting also connected coal’s share of the power generation that “many have questioned the manner in which market to national security. He claimed that baseload power is dispatched and compensated “[w]hen we’re at less than 30 percent . . . [and] [s]till others have highlighted the diminishing that creates vulnerabilities to attacks on diversity of our nation’s electric generation mix, infrastructure.”133 Administrator Pruitt did not specify and what that could mean for baseload power and which “vulnerabilities” would be exposed or explain grid resilience.” In short, according to Perry, “[g]rid how he arrived at 30 percent as the tipping point. experts have expressed concerns about the erosion of critical baseload resources.” By the summer of 2017, West Virginia Senator Joe Manchin and interim FERC Chairman Neil Chatterjee Two weeks later, Secretary Perry reiterated the joined the growing chorus from Washington touting letter’s main points at an industry conference, the importance of coal. While touring a coal-fired emphasizing DOE’s study would review “regulatory power plant in his home state with Secretary Perry,

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 17 Senator Manchin contrasted the large pile of coal support Secretary Perry’s key assertions in his initial outside the plant with natural gas delivery, which he letter that were later echoed by Administrator Pruitt said can be interrupted by cyber or physical attacks. and Chairman Chatterjee. He told reporters that “the country has to decide, First, DOE’s report does not endorse Secretary how much uninterruptible power do you want.”134 Perry’s assertion that “baseload power is necessary.” One month later, Chairman Chatterjee said on As an initial matter, DOE staff reports that resource FERC’s podcast that as a Kentucky native he has adequacy is sufficient across the country despite “seen firsthand . . . how important the contribution recent retirements. The report connects baseload coal makes to an affordable and reliable electric plants to the provision of Essential Reliability system.” He expressed his “commit[ment] to the Services that keep the grid stable.136 Rather than resilience and reliability of our electric system,” identifying specific types of plants needed to deliver which he noted “are essential to national security,” those services, DOE staff recommends (three times) and said he “believe[s] baseload power . . . including that FERC create “fuel and technology-neutral our existing coal and nuclear fleet . . . need to be markets” for ERSs.137 Staff also suggests recent properly compensated to recognize the value they baseload closures necessitate the development of provide to the system.”135 “a comprehensive strategy for long-term reliability and resilience,” but it does not say that maintaining baseload or fuel-secure generators must be a “DOE’s report is noteworthy for component of that plan. its failure to explicitly support Second, the report contradicts Secretary Perry’s Secretary Perry’s key assertions hypothesis about the connection between “regulatory in his initial letter that were burdens” and retirements of baseload generators. Instead, DOE staff found that “[t]he biggest later echoed by Administrator contributor to coal and nuclear plant retirements has Pruitt and Chairman been the advantaged economics of natural gas-fired Chatterjee.” generation.”138 Obama-era environmental regulations are listed last among second-tier factors, including flat demand for electricity and increased penetration Two weeks later, in late August, DOE released the of intermittent renewable sources. study that Secretary Perry ordered in April. The bulk of the report summarizes industry data and Third, the report contradicts the substance of highlights excerpts from documents published by Secretary Perry’s unattributed statement regarding DOE, NERC, and industry sources. This content “the diminishing diversity of our nation’s electric is generally uncontroversial. The document is generation mix, and what that could mean for . . . noteworthy, however, for its failure to explicitly grid resilience.” Perry’s claim about “diminishing diversity” was simply wrong. DOE staff found that

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 18 at a national level “the grid was, on average, more DOE Proposes to Pay Merchant diverse in 2016 than in 2002 in terms of both Coal and Nuclear Plants capacity and generation.”139 On the connection between fuel diversity and resilience, Perry was Nonetheless, just weeks later, DOE declared in correct in a limited sense. DOE’s report quotes a a notice of proposed rulemaking (NOPR) filed at May 2017 NERC conclusion that “fuel diversity and FERC that “the resiliency of the nation’s electric security provides best assurance for resilience,” but grid is threatened by the premature retirements of” that claim is limited to extreme weather events in baseload plants.145 In focusing on “resiliency,” DOE’s regions where the grid is heavily reliant on natural filing marked a shift in the campaign’s message. gas fired generation.140 While DOE staff could not reinforce Secretary Perry’s Fourth, the report explains, rather than “questions,” key talking points about baseload power in its report, the “manner in which baseload power is dispatched the report did raise questions about “resilience.” As and compensated.” DOE staff describes how the a threshold matter, the report found that “more work dramatic economic shift in natural gas generation is needed to define, quantify, and value resilience,” and growth of intermittent renewables upended and recognized the ongoing efforts of RTOs to do just bedrock assumptions embedded in wholesale that.146 The report recommended that DOE “support” electricity market operations.141 These “changes in industry efforts to “enhance system resilience,” the Nation’s generation mix have generally reduced and that RTOs should “further define criteria for revenues for incumbent baseload generators in resilience.”147 wholesale markets.”142 The report finds the “issue But DOE’s NOPR, entitled the “Grid Resiliency Pricing of revenue insufficiency and generator retirements Rule,”148 hijacked those efforts and capitalized on . . . complex” because “each plant has its own cost the ambiguity surrounding resilience by claiming structure and plant revenues can differ . . . in a that the resilience benefits of baseload power plants single market.”143 But rather than concluding that justify guaranteed profits for plants situated in baseload retirements due to revenue insufficiency certain RTO markets. As discussed above, market are necessarily a problem that must be fixed, prices reflect power flows on the grid, with high DOE staff hypothesizes that generator profitability prices in a particular geographic area reflecting local “could become a public policy concern if so much transmission bottlenecks. DOE’s NOPR asserted that generation is financially challenged that the reliability this pricing scheme is insufficient because it fails to or resilience of the [bulk power system] become account for the value of on-site fuel storage, which threatened.”144 Critically, the report does not say that DOE claimed significantly contributed to systemwide reliability or resilience is actually at risk. resilience.

This deficiency in the RTOs’ pricing scheme, according to DOE, could have dire consequences. The NOPR urged FERC to “protect the American

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 19 people from energy outages expected to result from DOE’s statements and conclusions were simply the loss of this fuel-secure generation capacity” unsupportable. by finalizing DOE’s proposed pricing scheme. This Nearly all of the comments filed by electric industry “expectation” was unsupported by any claims about participants reflected staff’s skepticism and urged resource adequacy concerns or violations of NERC FERC to reject the NOPR.150 PJM, the RTO that was reliability standards. DOE relied solely on supposed effectively singled out by the proposal’s definition threats to “resiliency,” a term it did not define of eligible plants,151 was unsparing in its criticism. and that FERC had never used in connection with PJM summarized that “[w]hile claiming to address wholesale rates. an imminent threat to the ‘resilience’ of the electric The NOPR proposed to remedy the identified grid from looming retirement of so-called ‘fuel- resilience problem by providing special secure’ baseload resources, the DOE NOPR fails compensation to coal and nuclear plants that have to demonstrate that any such threat is imminent, 90 days of on-site fuel supplies and do not recover that retirements are to blame, that competitive their costs from state-set retail rates (also known markets and specifically capacity markets are forcing as merchant generators). Instead of receiving the retirements that would not have otherwise occurred, rate set by RTO auctions, these plants would receive or that its proposed solution will actually address the rates based on their costs that would assure their perceived problem.”152 In short, PJM concluded, the profitability. DOE’s proposed rates would shield these “DOE NOPR misidentifies a problem, misstates the generators from competition and ensure that they cause, and then proposes a radical solution that is remain operational regardless of market prices. antithetical to clear Congressional and Commission policy in favor of promoting competitive energy Following DOE’s filing, FERC invited the public to markets.” submit comments on the proposal. “In order to assist [FERC] Staff in understanding the implications On January 8, 2018, FERC rejected the NOPR, of the proposed rule,” staff issued two dozen concluding that RTO market prices were not defective questions about the NOPR and requested that as DOE had alleged and that DOE’s proposal would commenters consider them in their responsive not result in just and reasonable rates. FERC filings.149 The highly unusual document reflected the therefore concluded that the NOPR “did not satisfy unprecedented procedure invoked by DOE, the scope [the] clear and fundamental legal requirements of the rule that seemed to counteract two decades under . . the FPA.”153 FERC also initiated a new of FERC support for competitive markets, and the proceeding whose goals include “develop[ing] a paucity of details in the NOPR. The document’s first common understanding . . . of what resilience of question, “what is resilience,” addressed the NOPR’s the bulk power system means and requires” and threshold failure to define the proposal’s key term. “understand[ing] how each RTO and ISO assesses FERC staff also questioned numerous assertions resilience.”154 As of the publication of this paper, in the NOPR, implicitly suggesting that many of FERC has yet to act in that proceeding in response

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 20 to numerous comments filed by industry and be closed” for a two-year period.156 Using language stakeholders. that would later appear in the NOPR, the document also stated that RTO markets should be reformed to Industry Allies and DOE “value fuel security [and] fuel diversity . . . that only Reinforce Bailout Push baseload generating assets, especially coal plants, can provide.” Murray sent EPA Administrator Pruitt a 157 FirstEnergy, a utility holding company that owns similar document. electric distribution companies, vertically integrated utilities, and merchant coal and nuclear plants, was “Letters from Murray in the only power sector company to provide unqualified support for the NOPR. The company’s comment August 2017 claimed that warned that “fuel-secure” resources are “needed to the companies were in keep the lights on in times of crisis,” and criticized market rules for “fail[ing] to recognize or compensate close contact with top generators with ample on-site fuel for those Administration officials, benefits.”155 The company’s strategy of amplifying including the President and DOE’s long-standing talking points and bolstering the NOPR with affidavits from industry experts Secretary Perry, about a and tariff language to implement DOE’s proposal bailout.” reflected the company symbiotic relationship with the Administration on its campaign to bail out Meanwhile, less than two weeks after he was uneconomic plants. sworn in as Secretary of Energy, Secretary Perry Administration responses to Freedom of Information was scheduled to meet with FirstEnergy CEO Act requests and media reports reveal that Chuck Jones.158 On a call with company investors FirstEnergy and Murray Energy, a coal mining a month later, Jones said that he had personally company, pushed the Administration to bail out aging met with Administration officials about bailing out coal plants and suggest that the companies may coal plants.159 According to Politico, in the spring have developed the core ideas underlying Secretary and summer of 2017 the President’s former Perry’s initial letter and the NOPR. Two weeks before campaign manager Corey Lewandowski spoke to top Perry issued his April 2017 memo, the Murray Administration officials about a bailout on behalf of Energy CEO sent Perry an “action plan for reliable FirstEnergy and arranged for meetings between the and low cost electricity” that proposed DOE “issue FirstEnergy CEO and the President.160 an emergency directive to have an immediate study Letters from Murray in August 2017 claimed that done of the security and resiliency of our electric the companies were in close contact with top power grids,” and “direct that no power plants having Administration officials, including the President and an available fuel supply of at least forty-five days

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 21 Secretary Perry, about a bailout. One letter sent DOE Continues to Focus on to a White House aide states that the company is Resiliency as FirstEnergy Asks “desperate for the President to . . . order Energy Secretary Perry to invoke section 202(c) of the DOE to Declare an Emergency Federal Power Act for FirstEnergy’s merchant [coal] plants.”161 The letter claimed that President Trump, January 8, 2018, the day that FERC rejected the his top economic adviser Gary Cohn, Secretary NOPR, marked the end of the “bomb cyclone,” a Perry, Chuck Jones, and Murray discussed a bailout. twelve-day weather pattern that caused unusually Murray’s letter further alleges that during one of cold temperatures in much of the eastern United 163 those conversations the President told Secretary States. The price of natural gas spiked, primarily Perry that he “wants this [bailout] done.” due to high demand for heating, and some power plants that usually burn natural gas switched to Two weeks later, Murray sent a letter to Secretary other fuels. As a result, wholesale electricity prices Perry, copying numerous Administration officials, to soared across the PJM, New England, and New York follow up on a prior conversation with Perry’s chief of markets. staff about invoking 202(c). Murray again advocated for a two-year moratorium on coal plant closures Following the bomb cyclone, DOE featured a and warned that failure to do so would result in National Energy Technology Lab (NETL) report on FirstEnergy Solution’s bankruptcy. It further claimed the “critical role of thermal units during extreme 164 that the PJM market is “fundamentally flawed” weather events” on its website. DOE’s summary because “the valuable attributes of baseload coal of NETL’s March 2018 study highlights the report’s and nuclear generation [are] taken for granted.” finding “that without the resilience of coal plants—its ability to add 24-hour baseload capacity—the eastern DOE’s decision to propose a market rule rather than United States would have suffered severe electricity invoke emergency powers under 202(c) did not shortages, likely leading to widespread blackouts.” change the bottom line for FirstEnergy and Murray. DOE’s synopsis echoed the NOPR’s conclusions The NOPR’s focus on merchant coal and nuclear about the 2014 “Polar Vortex,” a cold-weather plants in PJM aligned with the companies’ facilities. pattern that also caused high energy prices.165 The FirstEnergy Solutions, the merchant generation NOPR claimed that coal and nuclear units were arm of FirstEnergy that would declare bankruptcy in critical for maintaining reliability and resiliency in March 2018, owns plants exclusively in PJM. Murray 2014, but it ignored a NERC report that painted is the largest coal producer in the region, and nearly a more complex picture of baseload generators’ half of its sales are to coal plants in PJM. The two performance during the Polar Vortex.166 companies are also business partners – two-thirds of all coal burned at FirstEnergy Solution Plants is PJM responded with its own analysis of the bomb mined by Murray.162 cyclone that criticized NETL for “reach[ing] some sweeping conclusions that are not supported by the specific facts.”167 PJM explained that coal’s share

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 22 of power generation rose during the bomb cyclone DOE Pivots to National Security because natural gas was a more expensive fuel, as demand for natural gas heating spiked. The As DOE was accepting comments on FirstEnergy’s generation mix, according to PJM, was consistent 202(c) filing, it was developing yet another bailout with its normal economic dispatch of power plants proposal, which deviated substantially from the and did not reflect any special “resilience” attributes NOPR in its legal mechanisms and rationale. While of coal-fired power plants. Moreover, PJM had DOE’s prior focus was on deficiencies in the RTOs’ sufficient reserves available, undercutting NETL’s pricing scheme, its new focus was national security, claim there would have been “severe electricity a concern that received only passing references in shortages” without the above average contributions Perry’s initial letter and the NOPR. A leaked DOE of coal-fired plants. document dated May 29, 2018 outlined the rationale for compensating fuel-secure generation facilities, Just two days after DOE released NETL’s report, asserting that “resources that have a secure on-site FirstEnergy filed a request with DOE, asking that it fuel supply. . . are essential to support the Nation’s declare an emergency under FPA 202(c) “due to the defense facilities, critical energy infrastructure, and recent and imminent critical reduction in nuclear and other critical infrastructure.”171 The document was coal-fired generation capacity” in the PJM region.168 intended to accompany a DOE order, although that FirstEnergy’s core arguments echo the NOPR’s order has never been released. claims; both documents blame low prices that render merchant coal and nuclear plants unprofitable on The leaked May 29 document elaborates that PJM’s rules, which do not “value” the plants’ “fuel “to promote the national defense and maximize 169 security and resiliency” attributes. The company domestic energy supplies, federal action is embellishes the NOPR’s narrative by highlighting necessary to stop the further premature retirements the NETL report on the bomb cyclone to paint a dire of fuel-secure generation capacity while DOE, picture of the PJM region’s electric system. in collaboration with other federal agencies, the States, and private industry, further evaluates FirstEnergy’s request for a region-wide bailout was national security needs and additional measures to even broader than the relief that DOE proposed in safeguard the Nation’s electric grid and natural gas the NOPR. The company slashed the NOPR’s 90-day pipeline infrastructure from current threats.” The fuel requirement, asking DOE to require PJM to sign memo claims that the FPA and DPA provide DOE with four-year contracts with any plant that has 25 days authority to order RTOs and utilities to sign two-year of fuel on-site. Two days after it sent its request to contracts with certain fuel-secure facilities while it DOE, FirstEnergy Solutions filed for bankruptcy.170 conducts studies pursuant to the FAST Act to identify As of this paper’s publication, DOE has not formally defense critical electric infrastructure. Notably, this responded to FirstEnergy’s request. two-year window matches the two-year moratorium requested by Murray in 2017. In addition, the memo hints at the creation of a “Strategic Electric

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 23 Generation Reserve to promote the national defense regardless of costs or benefits to ratepayers. and maximize domestic energy supplies,” although it Importantly, the leaked document did not identify the does not provide any details. fuel-secure plants that comprise a resilient system.

Bailout Efforts Fizzle as a “In pivoting to national security, DOE Lawyer Becomes a FERC DOE conceded that the nation’s Commissioner electric system is reliable and entirely abandoned the NOPR’s On June 1, 2018, the Administration implicitly acknowledged its behind-the-scenes efforts to revive claims about deficient RTO the NOPR through energy emergency laws and the rules.” DPA. The White House Press Secretary issued a statement endorsing DOE’s longstanding position that “impending retirements of fuel-secure power Characterizing itself as a “national security facilities are leading to a rapid depletion of a critical agency,” DOE claimed responsibility for ensuring part of our Nation’s energy mix, and impacting the electric sector can withstand “multi-point the resilience of our power grid.” The statement attacks or other increasingly likely events of revealed that the President had “directed Secretary unprecedented magnitude and scope.” In pivoting of Energy Rick Perry to prepare immediate steps to national security, DOE conceded that the nation’s to stop the loss of these resources” and notes that electric system is reliable and entirely abandoned the President “looks forward to receiving [Perry’s] the NOPR’s claims about deficient RTO rules. recommendations.”172 Those recommendations, if Instead, DOE simply asserted that “all U.S. critical they ever arrived on the President’s desk, have never infrastructure depends on fuel-secure electric been revealed to the public. generation” and that such fuel-secure facilities “promote our national defense.” Secretary Perry told reporters in late September that support for coal plants was “still being bandied The issue, then, according to DOE, “is not whether around the White House.”173 In October, however, our Nation’s electric system has operated or is Politico reported the bailout has been shelved currently operating at a high level of reliability. “amid opposition from the President’s own advisors Rather, it is whether the Nation’s electric power on the National Security Council and National system is adequately prepared and resourced to Economic Council.”174 The article claimed that DOE withstand a high-impact electricity system disruption “remains united behind a plan to keep the coal caused by an attack, natural disaster, or other plants running” but that DOE “struggled to provide incident.” This system-based problem statement the White House with details on which plants would contrasts with the NOPR’s plant-specific approach get funding and who would pay” as well as a legal that would have assured a plant’s profitability

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 24 basis. Politico suggested that DOE may nonetheless above can be transformed into bailout vehicles for rollout a bailout plan down the line, as the President the Administration’s preferred fuel source. “frequently changes his mind, and the idea could While the Administration has yet to make a new, re-emerge in advance of the president’s reelection formal proposal to bolster particular, the leaked DOE campaign.” Memorandum offers some insight into potential Two months later, the U.S. Senate confirmed Bernard actions that might be part of a bailout attempt. McNamee as a FERC Commissioner. McNamee had First, DOE might order wholesale market operators worked at DOE through most of its efforts to bail to contract for power from coal-fired plants even out baseload plants and was a key architect of the when those resources do not or would not clear NOPR.175 Should DOE ultimately issue an order using wholesale markets. Second, DOE might require that its emergency authorities that compels purchases of utilities operating outside of RTO markets continue wholesale energy, the resulting contracts would likely to purchase energy from coal-fired generators be challenged at FERC as unjust and unreasonable on terms set by “existing or recent” contracts.176 while parties also litigate in federal court about Notwithstanding the delay in rolling out its programs, DOE’s authority to issue the order. McNamee’s we can expect DOE’s timelines to be short if it does appointment provides DOE with an ally in any such take formal action. In the leaked memorandum, proceeding and raises the possibility that FERC itself DOE noted that “immediate action is needed to might raise rates for baseload plants through its stop [so-called “fuel-secure” baseload generation regulation of RTO market rules. that have announced retirement dates] from being deactivated.”177

Part of the trouble with DOE’s approach is factual. Its own documents reveal shifting rationales to justify unprecedented federal intrusion into power markets. Perry’s initial memo declared that baseload The Misuse and Abuse generators are “necessary to a well-functioning grid.” But when his own staff failed to back that assertion, of Energy Emergency DOE vaguely insisted that coal and nuclear plants provide uncompensated “resilience” attributes. After Authority industry excoriated DOE’s NOPR and FERC rejected The various tactics described in the previous section it, DOE changed strategies to focus on worst- illustrate that the Administration is searching for case scenarios and national defense. In essence, statutory tools that will enable it to funnel money to the administration’s efforts to support baseload ailing baseload plants. Congress has never passed a generators, and coal in particular, have been framed law that provides this authority, however. None of the as a “solution in search of a problem.”178 statutory energy emergency authorities described The administration also faces legal barriers. The

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 25 various statutory solutions they have proposed or cite an ongoing war in which the United States is contemplated—under the Federal Power Act, the engaged or determine that “an emergency exists.”182 FAST Act, and the Defense Production Act—are The DOE’s own regulations define an “emergency” non-starters. A bailout is precluded by the statutory for purposes of FPA § 202(c) as “an unexpected text and would be inconsistent with the purposes inadequate supply of electric energy.”183 animating these laws. Moreover, that DOE felt compelled to assemble a defense of its actions by drawing on three different statutes demonstrates the “The various statutory solutions weakness of its position. When it comes to legislative they have proposed or delegations, addition of statutory authorities does contemplated are non-starters. not create anything greater than the sum of its parts. A bailout is precluded by the In the remainder of this paper we explain why the plain text of these statutes makes them a poor statutory text and would be fit for the administration’s efforts to save coal. inconsistent with the purposes When Congress drafts statutes, its members do animating these laws.” not (and indeed cannot) predict all of the future circumstances in which those laws might apply. In order to maintain flexibility, Congress frequently Coal plant retirements have not resulted in a supply chooses to use broad language so that its edicts shortage in the United States. And the wording can be applied to new problems without the need of 202(c) precludes future worst-case-scenario for legislative amendment.179 But this flexibility is predictions from triggering 202(c) authorities. not infinite.180 The administration’s efforts to extend The Eighth Circuit helpfully distinguished 202(c) energy emergency statutes to address longer-term authorities from those of §202(b), which also allows resource adequacy and fuel diversity concerns and FERC to order energy exchanges between utilities. to support specific fuel sources stretches these laws The latter, but not the former, apply “to a crisis which to the point of breaking.181 is likely to develop in the foreseeable future but which does not necessitate immediate action on the Triggering Events part of the Commission.”184 Furthermore, any decline in coal-fired generation The first problem with using Federal Power Act is the result of coal’s inability to compete in the 202(c), the FAST Act, or the Defense Production economic marketplace rather than structural Act to require or set prices for purchases of coal- incapacity. An industry coalition explained in a letter fired electricity in wholesale markets relates to to the DOE, “FirstEnergy’s true problem is not that the circumstances under which these Acts may there is an emergency on the grid, but that its power be invoked. As discussed, in order to exercise the plants lose money at current market prices.”185 As a authorities of FPA § 202(c), the DOE must either

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 26 result, the market for coal-fired power is dwindling. understand as indicating immediacy. Consequently, DOE’s regulations make clear that section 202(c) the President may invoke the FAST Act only in the is not meant to address this sort of scenario where face of a known and immediate cyber or physical parties fail to agree to terms for the sale of power. attack or a geomagnetic storm that impacts the Section 202(c), the D.C. Circuit confirmed, “is reliability of critical infrastructure. aimed at situations in which demand for electricity The leaked DOE memorandum suggests that the exceeds supply and not at those in which supply is Secretary plans to use its FAST Act authority to adequate but a means of fueling its production is in designate so-called “fuel-secure electric generation disfavor.”186 capacity” as critical electric infrastructure. It asserts Describing the coal industry’s economic woes as that the electric power system’s “resilience” (ability an emergency under the FAST Act is even more to recover from a high-impact event such as a far-fetched. The FAST Act permits the President to multi-point cyber attack), is negatively impacted declare a “grid security emergency” only when there by fossil and nuclear plant retirements.192 But that is an “occurrence or imminent danger” of either designation of resources as critical is only the Act’s “a malicious act using electronic communication first statutory requirement. Events disrupting that or an electromagnetic pulse, or a geomagnetic infrastructure or negatively impacting its reliability storm event” that “disrupts” the operation of must also have in fact occurred or be “imminent” in equipment that is “essential to the reliability” of order for DOE to invoke the Act’s other authorities. critical infrastructure,” or “a direct physical attack” No evidence has been offered that such impacts are on critical infrastructure that affects its reliability.187 likely in the immediate future. We are not arguing Only the effects of particular events on specific that catastrophic risks to energy infrastructure be infrastructure, and not the event themselves, trigger ignored even if they are of low probability. Indeed, the the Act’s authorities. federal government should prepare for and counter The DOE memorandum asserts that the FAST Act such risks through effective planning, infrastructure gives it broad authority to “respond as needed to the hardening, and disruption of criminal schemes.193 threat of cyber and physical attacks on the grid.”188 But action under the FAST Act is not the proper But those threats must be concrete and impending, vehicle for such longer-term planning. Indeed, the not merely speculative. Webster’s New International Act’s short timelines for action are likely to produce Dictionary (2d ed. 1934) defines “imminent” as ill-considered decisions that do little to enhance “threaten[ing] to occur immediately.”189 Webster’s reliability or resiliency in the longer term. Third gives its meaning as “ready to take place: Finally, the DPA does not support a bailout of coal- near at hand.”190 And Random House defines it as fired power plants. Title I of the DPA, as it relates “likely to occur at any moment: impending.”191 These to energy, may only be used to require sales and definitions are consistent with the common meaning priority allocation of materials deemed “scarce, of imminence, which the average person would critical and essential to conserve energy supplies”

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 27 or to “construct and maintain energy facilities.”194 Authorized Actions Given the record U.S. production of natural gas and 195 oil, as well as electricity from wind and solar, and Emergency statutes limit the nature of the repeated statements by the Administration touting government’s response to crisis. Neither the FPA the nation’s global “energy dominance,” it would be nor the DPA provides the Administration with the incongruous to find that coal-fired power is essential authority it seeks. The FAST Act is also an unsuitable to “conserve” energy supplies. vehicle for a bailout because interventions are strictly limited in terms of invocation and duration, as Title III’s loan guarantees must be connected described above and in the next section. to government contracts related to the national 196 defense, and may be used to prevent financial FPA section 202(c) gives the Secretary authority insolvency or bankruptcy only if the President details to order such temporary connections of facilities to Congress how such insolvency or bankruptcy and such generation, delivery, interchange, or “would have a direct and substantially adverse effect transmission of electric energy as in [her] judgment 197 upon defense production.” Title III also permits will best meet the emergency and serve the public the President to purchase industrial resources interest.”200 The requirement that the Secretary’s and to encourage “exploration, development, and actions “best meet the emergency” requires a mining of critical and strategic materials, and other narrow fit between those actions and the specific 198 materials.” This authority, too, hinges on a finding emergency identified.201 By contrast, the remedy that the resource is “essential to the national FirstEnergy sought in its petition—providing financial 199 defense.” support for every merchant coal and nuclear plant across utility territories in thirteen states—would be The DOE memo claims only that a robust domestic both unprecedented and inconsistent with statutory industrial base is essential to national security, and authority. that coal, nuclear, oil and natural gas are together “critical strategic components” of this base. Even if Even if DOE were to use its 202(c) authority to the Administration did attempt to connect coal-fired require purchases of electricity (which it has never power specifically, or some combination of coal- done), the prices governing sales of electricity under and nuclear-fired power, to national defense, and a 202(c) are limited by the Federal Power Act’s “just reviewing court deferred to DOE’s blanket assertions, and reasonable” standard.202 FERC is charged with permissible Administration actions would provide resolving disagreements about what this standard little relief to coal-fired power plants, as discussed requires.203 Even if the Secretary sought to require below. purchases of uneconomic coal-fired generation at above-market prices, FERC would have to concur. Given the Commission’s preference for using market mechanisms to set wholesale rates and its response to the DOE NOPR, this seems unlikely.

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 28 Title I of the DPA is of little use to the Administration, Although neither DOE’s memo nor FirstEnergy’s since it allows the government to require sales of petition expressly contemplated loans to struggling “scarce” resources, but not purchases. Coal plants plants, Title III could be invoked to provide loans are willing to produce power for sale, but there or loan guarantees that are tied to government are no buyers at the prices required to keep those contracts related to national defense. This very plants in business.204 The cost advantages of other limited authority has caveats, however. The sources (namely natural gas but also, in many parts President or Congress must declare a national of the country, renewable power) mean that utilities emergency if the industrial resource or critical are uninterested in purchasing coal-fired power technology shortfall is not identified in the budget and coal plants are routinely shut out of wholesale the President submits to Congress.209 And even auctions.205 The problem, therefore, is one of surplus, if the President argued that ailing coal plants are not scarcity. somehow connected to contracts relating to national defense,210 loan guarantees aimed at211 preventing Title I contains no authority to compel purchases of financial insolvency or bankruptcy must prevent an unwanted commodity. The DOE memo cites past a “direct and substantially adverse effect upon invocations of Title I in energy-related contexts in an defense production.”212 As FirstEnergy’s request for effort to demonstrate the statute’s applicability. But emergency action under FPA § 202(c) suggests, it its examples only reinforce the conclusion reached would likely use a government loan under Title III here. to stave off bankruptcy.213 And because the DOE’s During the California energy crisis, Energy Secretary current justification for supporting coal relies on an Bill Richardson ordered natural gas sellers to attenuated causal connection to national security, perform and prioritize contracts to sell gas needed it would be challenging for the President to show for electricity generation to PG&E.206 Pursuant to the that coal-fired power plant bankruptcies’ effect on Act, sales were to be on the same terms as existing “defense production” would be either “direct” or contracts between PG&E and sellers identified in “substantially adverse.” the order who may have been reluctant to sell to The President’s final option under Title III would the financially distressed utility.207 And during the be for the federal government to subsidize or to construction of the Trans-Alaska pipeline, various purchase coal-fired electricity. To do so, he would materials were prioritized for sale to the Alyeska have to argue that coal-fired power is an “industrial pipeline company.208 No price terms were discussed resource” that is “essential to the national defense” in the orders. In both cases, there were willing and that absent Presidential action U.S. industry (indeed, eager) buyers for the commodities specified cannot reasonably be expected to produce that in the orders. By contrast, here, utilities, RTOs, and resource in a timely manner.214 Alternatively, the other buyers are uninterested in purchasing coal- President can invoke the authority by declaring an fired power. emergency under the National Emergencies Act.

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 29 Explicit financial limitations in the DPA render it ill- determination would likely be scrutinized in federal suited to propping up an entire industry, or even a court. While courts customarily give deference to segment of an industry, over the medium- or long- Executive Branch judgments regarding national term. Loans and subsidies under Title III may not defense,218 that deference is not unlimited, especially exceed $50 million unless specifically authorized by where courts are not being asked to second-guess law.215 That amount of money would provide just two military decisions by the armed forces themselves.219 dollars per megawatt-hour for the annual output of And where, as here, there is tension between a FirstEnergy Solutions’ three merchant coal plants, statutory directive and the President’s actions, which already earn approximately $30 per megawatt- courts properly serve a mediating function.220 hour from sales to PJM. Such small payments would Finally, the FAST Act gives the Secretary significant be unlikely to make the plants profitable, and would discretion to craft remedies in response to a grid be reduced to just pennies per megawatt-hour if security emergency. However, these responses relief were extended to plants across the region, as are limited to those deemed “necessary . . . to FirstEnergy has requested.216 protect or restore the reliability of critical electric The $50 million cap may be waived “during periods infrastructure or of defense critical electric of national emergency” or where the President infrastructure during such emergency.”221 And as the determines “that a specific guarantee is necessary to next section will show, these responses are limited to avert an industrial resource . . . shortfall that would 15-day periods, making them an ineffective vehicle severely impair national defense capability.”217 Here for sustained industry support. again, the President would need to demonstrate not merely a connection between the domestic coal- Duration of Remedies fired power industry and national defense, but that a shortfall in electric power produced specifically by None of the identified statutes supports long- coal plants would “severely impair national defense term interventions. Of the three, the FAST Act was capability.” Without such a showing, a meaningful designed for the most targeted responses. Any coal plant bailout would require Congress to allocate emergency measures taken under that Act expire additional funds. 15 days after issuance.222 Although they may be reviewed for subsequent 15 day periods, this may In short, while the President might try to manufacture only be done if the President provides a written facts that connect coal-fired power plants to national determination that the grid security emergency defense and address the specific findings required “continues to exist or that the emergency measure under the law, the actions authorized by the DPA continues to be required.”223 are ill-suited to prop up a nation-wide industry. Regardless of whether the President purported to Orders under FPA § 202(c) must be “temporary.”224 If make the findings required by the DPA or invoked they conflict with environmental laws or regulations, the National Emergencies Act, the President’s they expire after 90 days (although they are

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 30 renewable for additional 90 day periods).225 even if properly invoked, these laws carefully confine the ability of the executive branch to subvert market The DPA’s timelines are the least restricted of the prices and bypass industry protocols. three statutes. However, individual agreements to purchase under Title III may not extend for more than Lawmakers, regulators, and system actors are ten years.226 And because the DPA itself sunsets confronting genuine questions about adapting in 2025, its availability as an ongoing source of the power system to modern challenges, from authority is uncertain.227 These durational limitations introducing greater levels of renewable generation are consistent with these statutes’ general purpose: to mitigating climate impacts. But these complex to target emergency scenarios and to provide challenges are properly dealt with in the context stopgap authority that lapses when the emergency or of existing reliability frameworks and established threat ceases. stakeholder processes. They are not the sort of questions that lend themselves to effective resolution by reflexive reaction to imagined emergencies.

Conclusion

Change in any industry can be disruptive, particularly one that, like the electricity industry, relies on century-old technologies. Unlike natural disasters or incidents of sabotage, generator turnover will not suddenly trigger a major blackout or energy emergency. With robust planning and operational excellence, the industry can manage the ongoing transition to an increasingly renewable-powered system using existing planning and rulemaking processes.

Framing everyday policy conundrums as emergencies is a favorite tool of presidents seeking to expand their own authority.228 But as the above discussion of energy statutes shows, only a genuine emergency is sufficient to unlock the limited powers Congress delegated to the President to intervene in power sector operations. Moreover, as described above,

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 31 Appendix: DOE Invocations of Federal Power Act Section 202(c)

Date Name Emergency Type of Emergency Duration

2000 California California Energy • Shortages of electric energy, 1.5 months Independent Crisis generation facilities, water used System Operator to generate electricity (generation) • Unusual volatility of electricity and natural gas markets • Other reasons 2002 Cross-Sound Availability of • Shortages of electric 1.5 months Cable Company energy on Long energy, generation facilities, (transmission) Island transmission facilities • Other causes 2003 Cross-Sound Northeast/Midwest • Shortages of electric 9 months Cable Company Blackout energy, generation facilities, (transmission) transmission facilities • Other causes 2005 CenterPoint Energy Hurricanes Rita & • Shortages of electric energy, 1-2 days (transmission) Katrina transmission facilities • Other causes 2005 Mirant Corporation “Reasonable • Shortages of electric 18 months (generation) possibility” of energy, generation facilities, blackout transmission facilities • Other causes 2008 CenterPoint Energy Hurricane Ike • Shortages of electric 2 weeks (transmission) energy, generation facilities, transmission facilities • Other causes 2017 Grand River Generator • Shortages of electric energy, 3 months Dam Authority retirement/ generation facilities (generation) lightning • Other causes 2017 Dominion Generator decision • Shortages of electric energy, 21 months Energy Virginia to cease production generation facilities (generation) • Other causes

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 32 21 Richard J. Campbell, Congressional Research Service, Weather- Endnotes Related Power Outages and Electric System Resiliency, Aug. 28, 2012, https://fas.org/sgp/crs/misc/R42696.pdf; U.S. Department of Energy, 1 16 USC § 824o. Quadrennial Energy Review vol 2 at 4-29 (2017). 2 Scott Hempling, Regulating Public Utility Performance 44–56 (2013); 22 Quadrennial Energy Review vol 2 at 4-5. see also Jim Rossi, The Common Law Duty to Serve and Protection of 23 Peter H. Larsen, et al., Recent Trends in Power System Reliability Consumers in an Age of Competitive Retail Public Utility Restructuring, 51 and Implications for Evaluating Future Investments in Resilience, 117 and ev V . L. R . 1233 (1998). Energy 29 (Dec. 2016). 3 Julie A. Cohn, The Grid (2017). 24 Id. (citing Paul Hines, Jay Apt, and Sarosh Talukdar, Trends in the 4 FERC, Reliability Primer at 22, https://www.ferc.gov/legal/staff- History of Large Blackouts in the United States, University of Vermont, reports/2016/reliability-primer.pdf. 2008); Evan Mills, Lawrence Berkeley National Laboratory, Extreme Grid 5 Curtis Cramer and John Tschirhart, Power Pooling: An Exercise in Disruptions and Extreme Weather, U.S. Disaster Reanalysis Workshop, Industrial Coordination, 59 Land Economics 24, 31 (Feb. 1983). May 3, 2012, https://pdfs.semanticscholar.org/presentation/4171/ 6 49 Stat. 947 (codified at 16 USC § 824 et seq.). ef9a8c0380bc068c85a2ee89672a728ad16f.pdf 7 16 USC §§ 824, 824a(b). 25 Quadrennial Energy Review vol. 2 at 4-28. 8 Cohn at 114, 123–24. 26 U.S.-Canada Power System Outage Task Force, Final Report on the 9 Cohn at 142, 169. August 14, 2003 Blackout in the United States and Canada: Causes and 10 NERC Comments, FERC Docket EL97-58, Sep. 11, 1997; Amicus Recommendations, Apr. 2004, https://www.energy.gov/sites/prod/files/ Brief of Edison Electric Institute, et al., 9th Circuit Docket 14-55076, oeprod/DocumentsandMedia/BlackoutFinal-Web.pdf. Aug. 29, 2014, http://appanet.files.cms-plus.com/PDFs/2014-08-29_ 27 16 USC § 824o. (Dkt_22-2)_ACB_of_EEI,_APPA,_NRECA,_and_EPSA.PDF. 28 FERC and NERC, Arizona-Southern California Outages on 11 Ari Peskoe and Kate Konschnik, Climate Implications of FERC September 8, 2011, Apr. 2012, https://www.ferc.gov/legal/staff- Proceedings at pp 5–8, http://eelp.law.harvard.edu/wp-content/ reports/04-27-2012-ferc-nerc-report.pdf. uploads/Climate-and-FERC-Proceedings.pdf. 29 Arizona Public Service, 148 FERC ¶ 61,009 (2014); Imperial 12 Coalition against Private Tariffs, 83 FERC ¶ 61,015 at 2 (1998). Irrigation District, 148 FERC ¶ 61,108 (2014); Southern California 13 U.S. Department of Energy, Notice of Inquiry: Interstate Electric Edison, 149 FERC ¶ 61,061 (2014); CAISO, 149 FERC ¶ 61,189 (2014); Transmission System; Electric Reliability Issues, 65 Fed. Reg. 69,753, Western Electric Coordinating Council, 151 FERC ¶ 61,175 (2015). Nov. 20, 2000. 30 See Idaho National Laboratory, Cyberthreat and Vulnerability 14 Energy Policy Act of 2005, 119 Stat. 941 (codified at 16 USC § Analysis of the U.S. Electric Sector, Aug. 2016 at 8–15, https://www. 824o); Mandatory Reliability Standards for the Bulk Power System, Order energy.gov/sites/prod/files/2017/01/f34/Cyber%20Threat%20and%20 No. 693, 72 Fed. Reg. 16416, Apr. 4, 2007. Vulnerability%20Analysis%20of%20the%20U.S.%20Electric%20Sector. 15 Id. at P 12. pdf. 16 Very large industrial facilities may connect directly to the interstate 31 Quadrennial Energy Review vol. 2 at 4-34. network. 32 Cyberthreat and Vulnerability Analysis at 11. 17 NERC’s three most recent annual reports summarize that the 33 Id. system provided an “Adequate Level of Reliability,” a NERC-defined 34 Rebecca Smith, “Assault on California Power Station Raises an term that encapsulates six overarching goals. Previous reports found Alarm on Potential for Terrorism, Wall Street Journal, Feb. 5, 2014; that the reliability “continued to remain high,” (2015) “sustained high Rebecca Smith, “Grid Attack: How America Could Go Dark,” Wall Street performance,” (2014) and that the system was “adequately reliable.” Journal, Jul. 14, 2016. NERC, Performance Analysis, https://www.nerc.com/pa/RAPA/PA/ 35 FERC Order No. 802, 149 FERC ¶ 61,140 (2014). Pages/default.aspx; see also U.S. Department of Energy, Quadrennial 36 Rebecca Smith, “Grid Attack: How America Could Go Dark,” Wall Energy Review vol 2. at 4-4, https://www.energy.gov/policy/initiatives/ Street Journal, Jul. 14, 2016. quadrennial-energy-review-qer/quadrennial-energy-review-second- 37 FERC Docket AD16-15-000, Transcript of June 1 Technical installment. Conference at 42:6–24. 18 Quadrennial Energy Review vol 2 at 3-4. 38 U.S. Energy Information Administration, Monthly Energy Review, Tbl. 19 NERC, Definition of Adequate Level of Reliability, FERC Docket 7.2A. RR06-01, May 10, 2013 (citing the old definition that is replaced by the 39 Quadrennial Energy Review vol 2 at 4-32. definition described in this filing). 40 NERC, Short-Term Special Assessment: Operational Risk 20 Id. Assessment with High Penetration of Natural Gas-Fired Generation,

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 33 May 2016, https://www.nerc.com/pa/RAPA/ra/Reliability%20 63 Id. Assessments%20DL/NERC%20Short-Term%20Special%20 64 See, e.g. Order Pursuant to Section 202(c) of the Federal Power Act Assessment%20Gas%20Electric_Final.pdf. (Dec. 14, 2000) (finding that “California is experiencing an unexpected 41 Rhodium Group, “Debunking the Narrative Behind a Power Industry shortage of electric energy” because of “a shortage of currently Bailout,” https://rhg.com/impact/enr/. operational electric generation facilities, a shortage of water used to 42 NERC, 2017 Long-Term Reliability Assessment at 5 https://www. generate electricity, unusual volatility of electricity and natural gas nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_ markets, and for other reasons . . . ”). LTRA_12132017_Final.pdf. 65 Emergency orders available on DOE website at https://www.energy. 43 Id. gov/oe/does-use-federal-power-act-emergency-authority-archived. 44 Id. 66 Id. 45 Reliability Primer at 14; NERC, Maintaining Bulk Power System 67 Id. Reliability While Integrating Variable Energy Resources — CAISO 68 Specifically, in each case plant owners had determined that Approach, Nov. 2013 at 1, https://www.nerc.com/pa/RAPA/ra/ continued operation would not be economic due to the need to install Reliability%20Assessments%20DL/NERC-CAISO_VG_Assessment_Final. environmental controls to comply with federal law. pdf. 69 16 U.S.C. § 824a(c)(1). 46 U.S. Department of Energy, Staff Report to the Secretary on 70 Report of Committee on Interstate Commerce on S. 2796 (May 14, Electricity Markets and Reliability, Aug. 2017 at 6–7, https://www.energy. 1935) 19-20; 74th Congress, 1st Session, Report No. 621. gov/downloads/download-staff-report-secretary-electricity-markets-and- 71 16 U.S.C. § 824a(c)(3). reliability. 72 Id. 47 Staff Report at 17. 73 DOE regulations require that it refer the setting of rates under 48 2017 Long-Term Reliability Assessment at 6. emergency orders to FERC. 10 CFR § 205.376. 49 Id. at 6. 74 16 U.S.C. § 824a(c)(2). 50 Maintaining Bulk Power System Reliability While Integrating 75 16 U.S.C. § 824a(c)(1) (emphasis added). Variable Energy Resources at 3. 76 Report of the Senate Committee on Interstate Commerce on S. 51 16 U.S.C. § 824 et seq. 2796 (May 14, 1935) 49; 74th Congress, 1st Session, Report No. 621 52 16 U.S.C. § 824o. (stressing that the section was designed to convey only temporary 53 15 U.S.C. §3391 et seq. authority). 54 15 U.S.C. § 717z. 77 16 U.S.C. § 824a(c)(4). 55 50 U.S.C. § 4501 et seq. 78 Id. 56 Brennan Center, A Guide to Emergency Powers and Their Use, Dec. 79 See Appendix. 5, 2018, https://www.brennancenter.org/analysis/emergency-powers. 80 DOE Order No. 202-05-3 (Dec. 20th, 2005), https://www.energy. 57 DOE, DOE’s Use of Federal Power Act Emergency Authority, gov/sites/prod/files/202%28c%29%20order%20202-05-3%20 https://www.energy.gov/oe/services/electricity-policy-coordination-and- December%2020%2C%202005%20-%20Mirant%20Corporation.pdf. implementation/other-regulatory-efforts/does-use. 81 16 U.S.C. § 824o-1(a)(7). 58 16 U.S.C. § 824a(c)(1). 82 16 U.S.C. § 824o-1(a)(3). 59 Id. 83 16 U.S.C. § 824o-1(a)(4), (c). 60 Id. 84 16 U.S.C. § 824o-1(b)(1). 61 Report of the Senate Committee on Interstate Commerce on S. 85 16 U.S.C. § 824o-1(b)(2). 2796 (May 14, 1935) 49; 74th Congress, 1st Session, Report No. 621 86 16 U.S.C. § 824o-1(b)(1). (noting that “such conditions should find a Federal agency ready to do all 87 10 CFR § 205.382(a). that can be done in order to prevent a break-down in electric supply.”). 88 10 CFR § 205.383(a). 62 See, e.g. DOE Order No. 202-17-1, Apr. 14, 2017, https://www. 89 16 U.S.C. § 824o-1(b)(5)(A). energy.gov/sites/prod/files/2017/04/f34/Oklahoma.pdf (noting that 90 16 U.S.C. § 824o-1(b)(5)(B). the affected generation unit may be needed to maintain compliance 91 15 U.S.C. § 3361(a); 15 U.S.C. §717z. The triggering language of with NERC reliability standards relating to voltage and reactive control the two sections is identical. and transmission operations); DOE Order No. 202-17-2, Jun. 16, 2016, 92 15 U.S.C. § 3362(k). https://www.energy.gov/sites/prod/files/2017/08/f35/Order%20 93 15 U.S.C. § 3362(a). These terms and conditions must include Number%20202-17-2_0_0.pdf, (stating that “several” NERC standards provisions “respecting fair and equitable prices.” Id. “are implicated if the [affected generation units] are unavailable”). 94 15 U.S.C. § 3362(b).

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 34 95 15 U.S.C. § 3362(c); 3363(h). The purchasers of the natural gas 129 Video, US Energy Secretary Rick Perry Keynote at BNEF Global must pay the cost of construction or transportation. Id. Summit 2017, Apr. 26, 2017, https://about.bnef.com/blog/us-energy- 96 15 U.S.C. § 3363(c)(2). secretary-rick-perry-keynote-bnef-global-summit-2017/. 97 15 U.S.C. § 3363(a). 130 Id. 98 15 U.S.C. § 3363(c)(1). 131 Timothy Cama, “EPA Chief: US Needs Coal to Protect Electric 99 15 U.S.C. §3363(c)(5). Grid.” The Hill, May 3, 2017, https://thehill.com/policy/energy- 100 15 U.S.C. § 3363(g). environment/331819-epa-chief-us-needs-coal-to-protect-electric-grid; 101 15 U.S.C. § 717z. Maxwell Tani, “Aren’t You Focusing on the Wrong Thing?: Anchors Grill 102 15 U.S.C. § 717z(f). EPA Administrator over Leaving Paris Agreement.” Business Insider, 103 15 U.S.C. § 3361(b)(1); 15 U.S.C. § 717z(b)(1). Jun. 4, 2017, https://www.businessinsider.com/scott-pruitt-epa-head- 104 15 U.S.C. § 3361(b)(2); 15 U.S.C. § 717z(b)(2). explains-why-trump-left-paris-agreement-2017-6; Reuters, Transcript 105 15 U.S.C. § 3364(c). Reuters Interview with EPA Administrator Scott Pruitt, Jul. 11, 2017, 106 50 U.S.C. § 4552(13) (defining “national defense” as “programs https://www.reuters.com/article/us-usa-epa-pruitt-text-idUSKBN19X01Z. for military and energy production or construction, military assistance to 132 Id. any foreign nation, stockpiling, space, and any directly related activity.”). 133 Emily Holden, “Pruitt Says Coal Losses Make Grid Vulnerable. 107 The President has delegated his authority under this section of Not Really” E&E News, Jun. 7, 2017, https://www.eenews.net/ the Act “with respect to all forms of energy” to the Secretary of Energy. stories/1060055661; E.O. 12919 at § 201(a)(2). 134 Michael Virtanen, “Perry: Coal-fired Power Plants Important in U.S. 108 50 U.S.C. § 4511(c)(2)(B) Future.” Associated Press, Jul. 7, 2017. 109 50 U.S.C. §4511(c)(2)(B). 135 FERC, Open Access Podcast Transcript, Aug. 14, 2017, https:// 110 Exec. No. 11790, 39 F.R. 23185 (June 25, 1974). www.ferc.gov/media/podcast/2017/08-14-transcript.pdf. 111 50 U.S.C. § 4511(b). 136 2017 Long-Term Reliability Assessment at 5; Staff Report at 112 50 U.S.C. § 4511. 68–88, 113 See Congressional Budget Office, Causes and Lessons of the 137 Staff Report, at 99, 100, 126. California Electricity Crisis 20 (2001), https://www.cbo.gov/sites/ 138 Id. at 13. default/files/107th-congress-2001-2002/reports/californiaenergy.pdf. 139 Id. at 89–91. 114 GAO Report, Trans-Alaska Oil Pipeline—Progress of Construction 140 Id. at p. 63 (quoting NERC, Letter to Secretary Rick Perry and Through November 1975 at 23-24 (1796), https://www.gao.gov/ Synopsis of NERC Reliability Assessments, May 9, 2017, https://www. assets/120/115918.pdf. See also 39 Fed. Reg. 34608 (Sept. 26, 1974) eenews.net/assets/2017/10/03/document_ew_01.pdf)). and expanded 40 Fed. Reg. 26 (Jan. 2, 1975); 40 FR 5409; 40 FR 141 Id. at 6–7, 111–118, 154–155. 19238; 41 FR 44476-77; 41 FR 53391. 142 Id. at 111. 115 50 U.S.C. § 4532(a). 143 Id. at 108. 116 50 U.S.C. § 4532(b)(1). 144 Id. at 118. 117 50 U.S.C. § 4532(b)(2). 145 Grid Resiliency Pricing Rule, FERC Docket No. RM18-1, Sep. 29, 118 50 U.S.C. § 4533(a)(1). 2017. 119 50 U.S.C. § 4552(12)-(13). 146 Staff Report at 100, 102, 118, 126. 120 50 U.S.C. § 4533(a)(5). 147 Id. at 126. 121 50 U.S.C. § 4531(e)(1)(C), § 4532(c)(3), § 4533(a)(6)(C). 148 Grid Resiliency Pricing Rule, FERC Docket No. RM18-1, Sep. 29, 122 50 U.S.C. § 4531(e)(1)(D), § 4532(c)(4), § 4533(a)(7). 2017. 123 50 U.S.C. § 4531(e)(2). 149 Request for Information, FERC Docket RM18-1, Oct. 4, 2017. 124 50 U.S.C. § 4533(b). A similar restriction applies to resale price. 150 See FERC Docket No. RM18-1. Id. 151 The NOPR would have only applied to merchant coal and nuclear 125 50 U.S.C. § 4532(b) plants physically located in RTOs that run a centralized capacity auction. 126 50 U.S.C. § 4564(a). The vast majority of plants that meet those criteria are in PJM. 127 Congressional Research Service, The Defense Production Act of 152 PJM Comment, FERC Docket RM18-1, Oct. 23, 2017, at 6. 1950: History, Authorities, and Considerations for Congress 3 (updated 153 Grid Reliability and Resilience Pricing, 162 FERC ¶ 61,012 at P Nov. 20, 2018), https://fas.org/sgp/crs/natsec/R43767.pdf. 14 (2018). 128 Rick Perry Letter to DOE Chief of Staff, Apr. 14, 2017, https:// 154 Id. at P 18. s3.amazonaws.com/dive_static/paychek/energy_memo.pdf. 155 FirstEnergy Service Company Comment, FERC Docket RM18-1,

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 35 Oct. 23, 2017, at 4, 22. 173 Rod Kuckro, FirstEnergy CEO Hopes Trump Keeps Pressing for 156 Documents Released on June 6, 2018 by DOE in Response to Relief, EnergyWIRE (Nov. 14, 2018). Freedom of Information Act Request Filed by Energy and Policy Institute, 174 Eric Wolff and Darius Dixon, Politico, Rick Perry’s Coal Rescue https://www.documentcloud.org/documents/4496409-Murray-Energy- Runs Aground at White House, Oct. 15, 2018, https://www.politico.com/ First-Energy-Documents.html#document/p42/a427974. story/2018/10/15/rick-perry-coal-rescue-trump-850528. 157 Id. 175 Appendix to Harvard Electricity Law Initiative Comment, FERC 158 Id. Docket AD18-7, Dec. 6, 2018, (excerpt from U.S. Senate Committee on 159 Energy and Policy Institute, FOIAs Reveal FirstEnergy Meeting with Energy and Natural Resources, Answers to Questions for the Record Rick Perry, 30+ Corporate Jet Flights to DC Since Trump’s Inauguration, Submitted by Mr. Bernard L. McNamee, Questions from Sen. Cantwell Jun. 8, 2018, https://www.energyandpolicy.org/foias-firstenergy-rick- and Sen. Sanders). perry-trump/. 176 Leaked DOE Memo at 3; FirstEnergy Solutions Request for 160 Eric Wolff et al., Politico, Lewandowski Pressed Trump on Emergency Order Pursuant to Fedeeral Power Act Section 202(c). Aid to Coal Industry, Aug. 25, 2017, https://www.politico.com/ 177 Leaked DOE Memo at 16. DOE made a similar claim in the 2017 story/2017/08/25/lewandowski-trump-coal-lobbying-242052. NOPR. DOE NOPR at 46945 (“Immediate action is necessary to ensure 161 Letters from Murray Energy to Trump Administration, https://www. fair compensation in order to stop the imminent loss of generators with documentcloud.org/documents/3936141-Murray-s-letters-to-Trump- on-site fuel supplies . . . .”). If the Administration truly views the need as administration.html. urgent, however, it is surprising that they would delay formal action. 162 Darius Dixon and Eric Wolff, Politico, “Trump Coal Backer Wins 178 Jennifer A Dlouhy, Trump Prepares Lifeline for Money-Losing Coal Big Under Perry’s Power Plan,” Nov. 6, 2017, https://www.politico. Plants, Bloomberg (May 31, 2018), https://www.bloomberg.com/news/ com/story/2017/11/06/trumps-coal-backers-energy-power-rick- articles/2018-06-01/trump-said-to-grant-lifeline-to-money-losing-coal- perry-244535. power-plants-jhv94ghl. 163 DOE, NETL Study Highlights the Importance of Coal for Power 179 See Freeman and Rossi, Old Statutes, New Problems. Generation During Bomb Cyclone Power Demands, Mar. 27, 2018, 180 Justice Scalia offered a memorable illustration when he noted https://www.energy.gov/fe/articles/netl-study-highlights-importance- that although use of the term “yellow” in a statute might be ambiguous, it coal-power-generation-during-bomb-cyclone-power-demands. clearly could never mean “purple.” U.S. v. Home Concrete & Supply, LLC, 164 Id. 566 U.S. 478, 498 n.1 (2012). 165 U.S. Energy Information Administration, Northeastern Winter 181 To the extent that this effort specifies the contexts in which Energy Alert, Jan. 22, 2018, https://www.eia.gov/special/alert/east_ federal energy emergency authorities may not be exercised, it is coast/. consistent with the National Infrastructure Advisory Council’s recent 166 NERC, Polar Vortex Review, Sep. 29, 2014, https://www.nerc. recommendations that federal emergency authorities be examined. com/pa/rrm/January%202014%20Polar%20Vortex%20Review/ NIAC, Surviving a Catastrophic Power Outage: How to Strengthen the Polar_Vortex_Review_29_Sept_2014_Final.pdf (noting that “baseload Capabilities of the Nation 8 (Dec. 2018 Draft), https://www.dhs.gov/ generators are generally not available at full rated capacity during sites/default/files/publications/NIAC%20Catastrophic%20Power%20 extreme weather events and do not significantly contribute to capacity Outage%20Study_508%20FINAL.pdf. during these periods” and that both coal and natural gas generators 182 16 U.S.C. § 824a(c). See also Amendment of Regulations Under experienced outages during the unusually cold weather). the Fed. Power Act; Part 32-Interconnection of Facilities; Emergencies; 167 PJM, Perspective and Response of PJM Interconnection to NETL Transmission to Foreign Country, 52 F.P.C. 1554, 1559 (Nov. 29, Report, https://pjm.com/-/media/library/reports-notices/weather- 1974) (“The sine qua non of Commission action under 202(c) is an related/20180413-pjm-response-to-netl-report.ashx?la=en. emergency.”). 168 FirstEnergy Solutions, Request for an Emergency Order Pursuant 183 10 CFR § 205.371 (emphasis added) (stating that, if the trigger to Federal Power Act Section 202, Mar. 29, 2018, at 16. of a supply shortage is economic and the result of parties’ failure to 169 Id. at 3. agree to terms, no emergency will be declared “unless the inability to 170 FirstEnergy Solutions Corp. Chapter 11 Petition, Bankr. N.D. OH supply electric service is imminent.”). The statute’s inclusion of “other Docket No. 18-50757 (Mar. 31, 2018). causes” as a basis for an emergency declaration should not be read 171 Leaked DOE Memo, May 29, 2018, https://www.scribd.com/ as a broad grant of authority. The ejusdem generis canon of statutory document/380740746/DOE-Coal-Nuke-Subsidy-Plan-1. construction dictates that this general phrase be interpreted in light of 172 White House Press Secretary Statement on Fuel Secure Power the specific items preceding it.See Regulations Under the Fed. Power Facilities, Jun. 1, 2018, https://www.whitehouse.gov/briefings- Act; Part 32-Interconnection of Facilities; Emergencies; Transmission statements/statement-press-secretary-fuel-secure-power-facilities/ to Foreign Country, 52 F.P.C. 1554, 1558 (Nov. 29, 1974) (noting that

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 36 the phrase implies causes related to those specifically enumerated). As Industry Can Only Decline, NBC News (June 1, 2017), https://www. an example of “other causes,” consider the 202(c) order in the wake nbcnews.com/business/energy/even-trump-cheerleader-coal-industry- of the California Energy Crisis in which DOE cited “[u]nusual volatility can-only-decline-n767216. of electricity and natural gas markets” as a justification for declaring 205 U.S. Energy Information Administration, Tbl. 6.7.A, Capacity an emergency. DOE Order, Dec. 14, 2000, https://www.energy.gov/ Factors for Utility Scale Generators Primarily Using Fossil Fuels, sites/prod/files/202%28c%29%20order%20December%2014%2C%20 https://www.eia.gov/electricity/monthly/epm_table_grapher. 2000%20-%20California.pdf. php?t=epmt_6_07_a (showing declining coal capacity factors). 184 Otter Tail Power Co. v. Federal Power Commission, 429 F.2d 232, 206 Department of Energy, Temporary Emergency Natural Gas 234 (1970). Purchase and Sale Order (Jan. 19, 2001). 185 Industry Memo to Rick Perry at 5, https://info.aee.net/hubfs/ 207 Id. While the Order noted that the Secretary of Energy would Trade%20Associations%20Letter%20and%20Legal%20Analysis%205-7- resolve any disagreements as to contractual terms, by law the authority 18.pdf. to determine whether contractual rates are just and reasonable lies with 186 Richmond Power and Light of City of Richmond, Ind. v. FERC, 574 FERC. See 16 U.S.C. § 824(c)(1). F.2d 610, 615 (1978). 208 See note 114. 187 16 U.S.C. § 824o-1(a)(7). The DOE has not publicly designated 209 50 U.S.C. § 4533(e)(1)(A). specific assets that it deems “critical.” The statute defines “[c]ritical 210 50 U.S.C. § 4533, §2092(a). electric infrastructure” and “defense critical electric infrastructure” and 211 50 U.S.C. § 4531, §2092(a). tasks DOE with identifying the latter. 16 U.S.C. § 824o-1(a)(4), (c). 212 50 U.S.C. § 4531(d)(2) (emphasis added). 188 Leaked DOE Memo at 34. 213 FirstEnergy Request for an Emergency Order Pursuant to Federal 189 Webster’s New International Dictionary of English Language Power Act Section 202 at 8. 1245 (2d ed.1934) (cited in Meghrig v. KFC W., Inc., 516 U.S. 479, 485 214 50 U.S.C. § 4533(a). The President can avoid these requirements (1996)). only by declaring a national emergency or determining that the action 190 Webster’s Third New International Dictionary (Merriam-Webster is needed to avert an industrial resource shortfall “that would severely 1993). See also Bucek v. Continental Cas. Ins. Co., 378 F.3d 284, 291 impair national defense capability.” 50 U.S.C. § 4533(a)(7). (3d Cir. 2004) (citing Webster’s Third New International Dictionary 1130 215 50 U.S.C. § 4531(e)(1)(C), § 4532(c)(3), § 45333(a)(6)(C). See (1st ed. 1966) also 160 Cong. Rec. H7002-04 (daily ed. Jul. 29, 2014) (statement of 191 Id. (citing The Random House Dictionary of the English Language Rep. Campbell) (“These programs are usually small, typically less than 957 (2d ed. 1987). $15 million, and in the history of the DPA, going back to the Korean war, 192 Leaked DOE Memo at 2. only three have exceeded $50 million, each of which was specifically 193 See recommendations in U.S. Government Accountability authorized by Congress.”). Restaurant, Critical Infrastructure Protection: Protecting the Electric Grid 216 Data from the Energy Information Administration shows that from Geomagnetic Disturbances (Dec. 2018), https://www.gao.gov/ FirstEnergy’s three coal plants – Bruce Mansfield, Sammis, and assets/700/696140.pdf. Pleasants – generated nearly 22 million megawatt hours in 2017, which 194 50 U.S.C. §4511(c)(2). would yield a subsidy of $2.30 per megawatt-hour. EIA, Form 923, 195 See Energy Information Agency, FAQs, What is U.S. Electricity https://www.eia.gov/electricity/data/eia923/. In 2017, the average per- Generation by Energy Source?, https://www.eia.gov/tools/faqs/faq. megawatt-hour energy price was $30.99. Monitoring Analytics, PJM State php?id=427&t=3. of the Market Report, https://www.monitoringanalytics.com/reports/ 196 As noted above in Section II, this requirement may be waived PJM_State_of_the_Market/2017.shtml. during a period of national emergency declared by Congress or the 217 50 U.S.C. § 4531(e)(1)(D), § 4532(c)(4), § 4533(a)(7). President. 50 U.S.C. § 4532(a). 218 Natural Resources Defense Council, Inc. v. Winter, 502 F.3d 859, 197 50 U.S.C. § 4531(e)(2). 862 (2007). 198 50 U.S.C. § 4533(a)(1). 219 In contrast to the civilian determination here, the cases most 199 50 U.S.C. § 4533(a)(5). The statute requires the President to commonly cited in favor of deference to the executive on matters of make three additional findings. national security typically involve determinations made by the military 200 16 U.S.C. § 824a(c)(1). or by the President as Commander-in-Chief. See, e.g. Department of 201 Id. Navy v. Egan, 484 U.S. 518, 529-30 (1988) (stressing the importance 202 Id. of deference to military determinations of security clearance eligibility); 203 10 C.F.R. § 205.376. Gilliam v. Miller, 973 F.2d 760, 762 (9th Cir. 1992) (noting that deference 204 See Martha C. White, Even With Trump as Cheerleader, the Coal to military decision-making is appropriate due to the special function

Energy Emergencies vs. Manufactured Crises | Sharon Jacobs and Ari Peskoe 37 of the military in our constitutional structure); Hammond v. Lenfest, 398 F.2d 705, 715 (2d Cir. 1968) (noting that “the federal courts have traditionally afforded the military the broadest possible discretion in military matters and questions which turn on the national defense.”). 220 See United States v. Am. Tel. & Tel. Co., 551 F.2d 384, 392 (D.C. Cir. 1976) (“Thus, the cited cases do not establish judicial deference to executive determinations in the area of national security when the result of that deference would be to impede Congress in exercising its legislative powers”). 221 16 U.S.C. § 824o-1(b)(1). 222 16 U.S.C. § 824o-1(b)(5)(A). 223 16 U.S.C. § 824o-1(b)(5)(B). 224 16 U.S.C. § 824a(c)(1). 225 16 U.S.C. § 824a(c)(4). 226 50 U.S.C. § 4533(b) 227 50 U.S.C. § 4564(a). 228 For a history of such invocations, see Brennan Center for Justice, A Guide to Emergency Powers and Their Use (2018), https://www. brennancenter.org/analysis/emergency-powers. See also Chris Edelson, Emergency Presidential Power (2013) (surveying unilateral invocations of presidential emergency power in the national security context).

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